The Circular Flow of the Economy

According to their website, General Mills has become one of the largest food companies in the globe (General Mills, 2013). The location of this economic actor in the circular flow diagram is the firm sector (a). General Mills produces goods and services to be sold to consumers (households) such as cereal, yogurt, meals, and snacks. A household (b) generates a payment to General Mills for their products (c) and General Mills receives a return flow of money from the household (d). These two initial transactions start the “circle” of the circular flow diagram. Once General Mills process the payment, they then use this for business labor expenses (e). These paid expenses are then received by the resource markets to pay the employees of General Mills (f). As you can see, each of these transactions has now created a never ending “circle” of spending habits from the four main sectors of the economy. General Mills then pays their business taxes to the government (g) and/or receives payments from the government depending on the services provided (h). I also understand that there are many other factors that can come into play such as financial markets (borrowing) and foreign markets (import/export), however these didn’t necessarily align with my circular flow diagram at this time. h h g g f f e e d d c c b b a a

References
General Mills. (2013). Businesses. Retrieved 04 08, 2013, from General Mills: http://www.generalmills.com/en/Company/Businesses.aspx
Farnham, P. G. (2010). Economics for Managers (2nd ed.). New York: Prentice Hall. Chapter 1, 11.

McAfee, R. P., & Lewis,T. R. (2009). Introduction to Economic Analysis. Irvington, NY: FlatWorld Knowledge. Chapters 1, 4

References: General Mills. (2013). Businesses. Retrieved 04 08, 2013, from General Mills: http://www.generalmills.com/en/Company/Businesses.aspx Farnham, P. G. (2010). Economics for Managers (2nd ed.). New York: Prentice Hall. Chapter 1, 11. McAfee, R. P., & Lewis,T. R. (2009). Introduction to Economic Analysis. Irvington, NY: FlatWorld Knowledge. Chapters 1, 4